Send this to a friend

W. Marc Bernsau | Business JournalXiaotian Zhu, director of structural and computational chemistry at Ariad in Cambridge, sets up a kinase protein crystal to be X-rayed to show its dimensional structure as part of developing small-molecule medicine to bond closely with the protein and potentially inhibit cancerous growth.

It took nearly a decade before Harvey Berger made the decision to devote Ariad Pharmaceuticals to making cancer drugs.

Berger and his firm struggled throughout the 1990s to come up with a drug that could be sold to the public.

The goal was to develop treatments that would penetrate a cell and destroy a disease from the inside. Ariad’s focus was on genomics, analyzing DNA to study the effects of individual genes. But a path to commercialization never became clear.

That all changed in 2000, after genetic research emerged that could identify specific mutations that could cause particular kinds of cancer. Berger knew about the strong data coming out of Novartis for a drug that could disrupt the chain of chemical events between a gene and a cancer, and he decided to bet Ariad’s future by focusing entirely on cancer.

It turned out to be a smart bet. Ariad’s first drug Iclusig was approved last year to treat a type of blood cancer known as CML that’s diagnosed in about 5,000 patients a year. The approval fueled an expansion from 150 employees last year to 450 this year, with a new headquarters under construction in Cambridge. Sales of Iclusig — which costs $115,000 a year per patient — brought in more than $20 million in revenue in the first half of 2013. Investment bank Cowen and Company predicts Iclusig sales will reach $350 million by 2016, and more than $2 billion by the time the patent expires in 2026.

Ariad’s ascent reflects a major shift in the industry, here and elsewhere in the country. Cancer has become the biggest business in the biotech world, and the Massachusetts’ economy is reaping the benefits. Nearly half of the 980 oncology drugs in development nationwide last year were being researched right here in the Bay State. More than one third of all drugs being tested by local companies last year were for cancer. That makes cancer the single biggest disease type targeted by the state’s biopharma industry, which accounts for more than 56,000 jobs and $6.5 billion in salaries.

Advances in gene research have played a key role in this unprecedented growth streak in oncology drugs, one that can be traced back to the 2001 launch of Novartis’ CML drug known as Gleevec. While a diagnosis of CML in the late 1990s would have meant certain death, with today’s drugs, patients can live out a normal life. Certain types of cancers now have several so-called “targeted therapies” — which kill only cancer cells, unlike chemotherapy — that are extending the life spans of those patients dramatically.

As the cancer market has become increasingly fragmented, with drugs aimed at small subsets of patients with the same cancer-causing gene mutations, the trials required for approval have become faster and less expensive to conduct. The U.S. Food and Drug Administration has made an extra effort over the past eight years to help biotechs bring promising drugs to market. Meanwhile, profit margins remain high for cancer drugs, as insurers are willing to pay more than $100,000 a year to extend their members’ lives.

This targeted approach using genomics has become known as precision medicine, and has led to much greater certainty that when a cancer drug is prescribed to a particular patient, it will actually work.

“The genetic subclassification of cancer is very powerful, and results in the dividing of the patient population into small slivers,” said Todd Golub, director of cancer programs at Harvard’s Broad Institute.

That certainty has resulted in smaller, less expensive clinical trials using only those patients identified as the genetic subtype targeted by the drug. But it’s also made health insurers more willing to pay top dollar for them after they are approved, knowing that the percentage of patients likely to respond will be higher than older cancer drugs, said Doug Cole, general partner at Flagship Ventures in Cambridge.

But Cole said that benefit for the biotech firms may not last for long. “I think it seems likely that the health care system will increasingly be unwilling to pay for drugs that are only incrementally better,” Cole said.

New drugs have contributed to a drop in the mortality rate of cancer patients in the past several decades, said Mark Goldberg, a hematologist at Brigham and Women’s Hospital. In the late 1980s, 56 percent of patients with cancer of all kinds survived at least five years from the initial diagnosis. In the mid-2000s, that percentage had grown to 68 percent.

While over time, the incremental benefits of new drugs have added up, Goldberg said insurers are now beginning to weigh the value of two or three extra months of survival from a new drug.

“Society needs to put a value on how important that is,” he said. “The question is, what’s clinically important, and what’s important to society. There will be more and more pressure for companies to justify the benefits of their therapies.”

The FDA does not take cost into account when considering a new drug for approval, said Richard Pazdur, director of the Office of Hematology and Oncology Products at the FDA. “We look solely at safety and efficacy,” he said. “We have a hard enough time with that.”

Pazdur has been credited for much of the growth of cancer drugs in recent years. Since his department was created in 2005, he’s invited biotechs in to showcase their research, and has used tools like accelerated approval and other special designations whenever possible in an attempt to get more effective drugs on the market faster.

While Pazdur says some areas of oncology have yet to be adequately pursued — including brain and ovarian cancer, as well as pediatrics — he is optimistic about the future of the field. “I think we’re just on the brink of a really dramatic improvement in cancer,” he said.

In fact, there have been more cancer drugs approved in the past three years than at any time since the late 1990s. After more than a decade when fewer than 10 new oncology drugs were approved per year, there were 12 drugs approved in 2011 and 19 in 2012. So far in 2013, there have already been 10 approvals in oncology.

The effect of the FDA’s efforts to use accelerated approval and other special designations has been to inspire investors to put their money into small biotechs. One such company is Verastem, a three-year-old Cambridge startup that makes drugs aimed specifically at so-called cancer stem cells, the small percentage of cancer cells believed to survive other drugs and be responsible for eventual relapses.

Earlier this month, Verastem began a trial involving up to 400 patients that it hopes will form the basis of a promising drug for mesothelioma, an aggressive form of lung cancer usually caused by exposure to asbestos. The drug candidate, called defactinib, has been granted orphan drug designation in the U.S. and Europe, which often means a faster approval process.

Dan Paterson, Verastem’s chief business officer, said that investors are more interested in small biotechs that make cancer drugs than firms that make other treatments, such as those for cardiovascular illnesses. Massive late-stage trials of more than 1,000 patients are needed to prove efficacy for heart disease, he said, while cancer drug approvals can often be based on good results in a mid-stage trial.

“From an investment perspective, at any given time, we’re potentially a single clinical trial away from having a drug,” he said.

But the factors that conspired to create this boom in cancer companies could be changing. Ryan Cohlhepp, the senior director of U.S marketing for the Millennium oncology drug company in Cambridge, the conversation is just beginning in the U.S. about reining in reimbursement levels for cancer drugs.

“I think in the next three or four years, (cancer) is going to start to be much more like a cardio or cholesterol market, with lots of competition and lower prices,” said Cohlhepp, whose company is the oncology arm of Japanese drug maker Takeda.

To some extent, the game will change because of patent expirations. Gleevec will lose the first of its U.S. patents in 2015. That is expected to not only force costs down for that drug due to generic competition, but for all chronic myeloid leukemia drugs, including Ariad’s Iclusig.

But Berger, the Ariad CEO, said he’s not concerned that makers of gene-based cancer drugs won’t continue to be able to charge steep prices to insurers.

“A person diagnosed with CML will now live a normal life. Ten years ago, that would have been a death sentence,” Berger said. “New targeted medicines are expensive to develop and we all have to invest huge risk capital. I really don’t think that the cost is a genuine argument against these drugs. As long as we continue to show efficacy, they will command a premium price.”

Limiting The use of the ‘c-word’

Twenty years ago, cancer was thought to be a single disease with many forms of expression. Today, it’s been broken down into so many different subsets that the very use of the word “cancer” has been challenged as it applies to certain diseases.

“It has too many psychological implications,” said Christopher de Souza, a partner at Broadview Ventures, a venture philanthropy firm focused on cardiovascular treatments. “Now, when you look at cancer, you have to look at all different types of diseases.”

In fact, in March 2012 the National Cancer Institute held a meeting to address what it saw as an “overdiagnosis” of cancer over the past 30 years. A July editorial in the Journal of the American Medical Association outlined the findings of a working group formed out of that meeting.

“The word ‘cancer’ often invokes the specter of an inexorably lethal process,” the editorial states. “However, cancers are heterogeneous and can follow multiple paths, not all of which progress to metastases and death, and include indolent disease that causes no harm during the patient’s lifetime.”

The authors argue that the term “cancer” ought not be used for premalignant tumors, but only for those “with a reasonable likelihood of lethal progression if left untreated.” It also urges the development of better diagnostic tests that can differentiate between tumors that are benign and those that are malignant.

CANCER FIGHTERS | Nearly 40 percent of all drugs being tested in Massachusetts last year are oncology treatments. Here are some of the biggest local players.

What they do: Small-molecule inhibitors of the c-Met receptor tyrosine kinase, which plays a key role in cancerous cell proliferation, metastasis, new blood vessel formation and resistance to various drug therapies.

Industries:

Comments

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.